A Current Account Deficit

question 95

Multiple Choice

A current account deficit

• A) will not pose a problem, especially if it is accompanied by an expansionary fiscal policy.
• B) may pose no problem if the borrowed funds are channeled into productive domestic investment projects that pay for themselves with the revenue they generate in the future.
• C) may still pose a problem, even if the borrowed funds are channeled into productive domestic investment projects.
• D) There is no relation between current account surplus and between savings and investment.
• E) will pose a problem because the country is borrowing funds from the rest of the world that it won't be able to pay back later.

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Reciprocity

A social principle that involves exchanging things with others for mutual benefit.

Red Background

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